Sebi spells out guidelines for alternative investment funds in IFSC

Updated : November 28, 2018 06:53 AM IST

The Securities and Exchange Board of India (Sebi) has issued detailed guidelines to regulate aspects around compliance of alternative investment funds (AIF) in international financial services centres.

These guidelines are set up for AIFs that are operating as trust, company or limited liability partnership under Sebi AIF regulations 2012.

For registration as AIFs, Sebi said any fund established or incorporated under IFSC (Indian Financial System Code) in the form of a trust or a company or a limited liability partnership or a body corporate, can seek registration under the regulations.

Sebi said under the new framework, AIFs will be allowed to invest in India via foreign venture capital investor and Foreign Direct Investment (FDI) route. Earlier, AIFs were only allowed to invest in India via Foreign portfolio investment (FPI) route.

Commenting of AIF schemes, market regulator said it's mandatory for each scheme to have a minimum corpus of $3 million. The AIF shall accept from an investor, an investment of value not less than $1,50,000, Sebi added.

Further, for investors who are employees or directors of the AIF or employees or directors of the manager, the minimum value of investment shall be $40,000. For category III AIFs, Sebi said continuing interest of manager/sponsor shall not be less than 5 percent or $1.5 million whichever is lower.

Also, category III AIFs will have to mandatorily appoint a custodian. For category I & II of AIFs, sponsor or manager will have to maintain a continuing interest of not less than 2.5 percent of the corpus or $750,000, whichever is lower in the form of investment and such interest will not be through the waiver of management fees.

Sebi’s circular also lays down regulations on angel funds and their investments in India. The market regulator said any angel fund investing in India will have to keep a minimum corpus of $750,000.

Also, individuals investing in angel funds will be mandated to have net tangible assets of at least $300,000. For a body wanting to invest in an angel fund, it will have to enter and maintain a minimum corpus of $1.5 million.

Sebi spells out guidelines for alternative investment funds in IFSC

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